Carmel's 4CDC releases new records, raising new questions

Carmel Mayor Jim Brainard, left, talks about the 4CDC and Carmel development during an interview at City Hall, Tuesday, June 17, 2014. He is accompanied by and 4CDC president Ron Carter, center, and city spokeswoman Nancy Heck.
(Photo:
Kelly Wilkinson/The Star
)

CARMEL – In response to lingering questions from a state audit — and increasing complaints from some Carmel City Council members and the public — a nonprofit with ties to the city government has released bank records that shed some light on the nonprofit's spending.

But some contend the new records do little to answer specific questions about how money was spent, while raising broader questions in Carmel and across Indiana about just how transparent such entities should be about their finances.

President Ron Carter of the Carmel City Center Community Development Corp. also known as 4CDC, this week released two years' worth of bank records to demonstrate the group's transparency. The revelations came in the wake of an Indianapolis Star report detailing how commercial taxpayers were paying off the construction costs of an office building that supplied a substantial portion of the group's revenues, money that it later used to skirt City Council oversight of public funds.

The 24-page check register lists the group's deposits and withdrawals totaling $16 million from 10 bank accounts. However, because government grants, parking revenues and rent moneys are all commingled in the various accounts, it's difficult to determine which funds were spent on what.

For instance, the $403,565 spent to operate the 4CDC office building was paid out of three bank accounts. Meanwhile, some of the tenant revenues that would seem to correspond to that building's operations flowed into a fourth — the construction account.

From this account, the 4CDC spent money on a variety of purposes, including heating and air conditioning work, professional fees and a $100,000 legal settlement paid out to Steve Libman, the former president and CEO of the Center for Performing Arts. The transaction was redacted, but 4CDC officials had previously acknowledged the money went to Libman.

"If it involves public money and there are questions about it — even if you are private and don't have to — I really think you should try to explain it," said Councilor Luci Snyder, head of the city's finance committee.

Curt Coonrod, whose accounting firm advises the city and 4CDC, could not be reached Friday afternoon for comment.

Coonrod himself represents one of the takeaways from the records: The extent to which Carmel has relied on highly paid professionals to craft the complicated legal transactions used to build the $180 million Center for Performing Arts.

The 4CDC spent more than $615,000 on financial and legal consultants in the two-year period, and when asked about it, the city issued a statement.

"4CDC avoids cost by carrying no staff and relying on a volunteer board to conduct its business," city spokeswoman Nancy Heck said. "Matters that require paid assistance are handled by part-time lawyers, accountants and clerical personnel who are paid only as needed. Some transactions are complex, and careful legal review is needed to protect 4CDC and the city from loss."

The bulk of the $615,000 money went to C.L. Coonrod & Company, the accounting firm that received $342,000 from the group. That's on top of another $373,000 that Coonrod was paid by the city government in the same time period as a special financial adviser to Mayor Jim Brainard.

Combined, the $715,000 was ostensibly spent on a similar purpose: advising the city of Carmel and its support agency on complex financial matters. And, the money was all derived in some way from public tax dollars.

This might suggest the public would have a right to know the details of how it was spent. But not so, and that's what raises questions not only in Carmel but in Indianapolis and other communities in the state. The public does have a clear right to the city's invoices, but the financial records of nonprofit community development corporations are released only at the discretion of the CDC.

In fact, other CDCs around the state offer less transparency than Carmel's. The Lawrence CDC, which is independent from the city government, makes only its Form 990 tax returns public.

"We do like to keep our budgets and active projects quiet, because when you're working in redevelopment work, sometimes you don't want everybody to know your plans before you choose to announce them," said Chris Barnett, director of the Lawrence CDC, adding that the group had been burned on revealing too much, too soon in the past.

The Lawrence group, however, has no ties to the government. The Circle Area CDC in Indianapolis is a closer match to Carmel's because it receives grant funding from the city of Indianapolis, and its board of directors is appointed by Mayor Greg Ballard.

But unlike the 4CDC, the Indianapolis group's board meetings are closed to the public, and board President Nick Weber said the group doesn't make its budget public.

It is not even required to file a Form 990, he said, because of a wrinkle in federal requirements for nonprofits.

Brainard, meanwhile, insists that Carmel's CDC is the most transparent of its kind in the state. But in Carmel there is also a greater push for the 4CDC to be open about how its money is being spent. And Brainard this week said he would support adding new layers of transparency in response to the complaints.

"The financial reporting should be available," Brainard said. "The more info out there, the fewer questions there will be."

Still, it's unclear how much openness he's willing to require. He said he hasn't considered whether to add mandatory financial reporting to the group's bylaws.

"There may be some things where it's not appropriate, where it's the bridge between (government) and a private corporation," Brainard said.

Carter released the bank records, in great part, to demonstrate transparency and also to satisfy the barrage of questions about the group's finances. Specifically, he said the records released were in response to a December 2013 request from City Clerk-Treasurer Diana Cordray, who was, in turn, trying to answer questions from a lingering state audit. The 4CDC had previously refused that request.

The audit was concerned that it could not verify how the 4CDC was spending public grant money it has received from the Carmel Redevelopment Commission.

Cordray was out of the office Friday and could not be reached for comment. But Mike Shaver, a consultant who works closely with her office, said she had forwarded the response to the State Board of Accounts.

Still, it remains unlikely that the records will satisfy the public inquiries about the group. Shaver said Cordray's office received around two dozen requests for information about the CRC in the last few months, a group whose finances are intertwined with that of the 4CDC.

Snyder said she would have to seek legal advice to determine if the council could change the group's bylaws on its own to require some financial reporting.

In the meantime, she said, the 4CDC remains a private corporation. If you want something they don't want to give, she said, "all you can do is shame them."